Inventories (negative)


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Nov 27, 2018
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Sweden
Hi,

do you know an answer to the following question:

While modelling the change of inventories in a cash flow statement, it is obvious that it is simply the change of inventory amount among years. My question regards to how to calculate the amount of the inventory per year. It can be calculated as the amount of items that are kept in the inventory (Inventory turnover * materials / 365).

The items can be whatever and "the materials" is the total sum of the material cost per year. For example material 1 10€ and material 2 15€. What if there is a gate fee for material 3 which is -20€ meaning the material 3 is free of charge to the company?

Which way does it go?
Inventory turnover, say 90 days.

1. (90*(10+15+-20)) / 365
2. (90*(10+15+20)) / 365

The question relates to a simple financial model.

Thanks a lot in advance!

Br,

Mike
 
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